Brent Oil May Rally to $127 on ‘Double Buy’: Technical Analysis
Brent traded at about $120 a barrel on the London-based ICE Futures Europe exchange, having climbed 8 percent this month. Weekly prices completed a “head and shoulders” formation at the end of last year, typically an indicator of further gains, and at the end of January broke above a downward-sloping channel that had capped the market since April, London-based technical analyst Stephanie Aymes said in a report on Feb. 18.
There has been a “weekly double buy signal triggered,” Aymes wrote.
The first “shoulder” of the head and shoulders pattern was formed in early September, the head in early October, and the second shoulder through to mid-December, she said.
This may push the April Brent contract to as much as last year’s peak at $122.20, according to Societe Generale. Reaching this point may trigger additional gains toward $126 or $127 a barrel, Aymes said.
In March, when the difference between Brent and the U.S. oil benchmark, West Texas Intermediate, was about $8 a barrel, Aymes correctly predicted the spread would widen. It reached a closing peak in October of $27.88 a barrel.
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